Midway Games swing to loss

Transition to new game hardware spares no one

By

ScottBanerjee

SAN FRANCISCO (MarketWatch) -- Midway Games Inc. said late Thursday it swung to a fourth quarter loss, as the publisher of video games such as "Blitz: The League" and "L.A. RUSH" was hurt as consumers delayed purchases while awaiting new gaming hardware.

Chicago-based Midway also said its first quarter and fiscal 2006 sales would come in well below analysts expectations.

Midway
MWY, +4.70%
shares were halted after the close of the regular session, in which they closed up 14 cents, or 1.3%, to $10.87.

Chicago-based Midway reported a fourth quarter loss of $37.8 million, or 42 cents a share, compared with a profit of $17.6 million, or 19 cents, a year earlier. The results included a $10.8 million charge related to the restructuring announced in December.

Four analysts polled by Thomson First Call were expecting a loss of 24 cents a share. It was unclear whether those estimates factored in the charge.

Revenue came in at $69.8 million, down 10% from a year ago but more than analyst expectations of $64.5 million.

The company faces a predicament similar to rival video game publishers like Electronic Arts Inc. and Activision Inc., in which consumers delay the purchase of video games in anticipation of new game consoles from companies such as Microsoft Corp., Sony Corp. and Nintendo Ltd.

"Midway's fourth quarter results reflect the challenging industry environment that has affected nearly all software publishers at this point in the console transition," said President and Chief Executive Officer David Zucker, in a statement.

For the current first quarter, the company said it expects net revenue of approximately $13 million, with a net loss of approximately $22 million. Analysts are expecting sales of $40.2 million.

For the current fiscal year ending December 31, Midway expects a loss of $66 million on sales of $155 million. Analysts are expecting revenue of $226.7 million, with a loss of 33 cents a share.

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